Many in Redlands are thinking about New Year's resolutions (as they happily say farewell to 2020). It has been a year like no other—with businesses going virtual and pivoting (with my favorite downtown salon offering half off services during the pandemic), Riverside and San Bernardino counties potentially losing over 102,000 jobs , more restaurants offering take-out, and, unfortunately, many area institutions such as Taylor’s Bar & Grill and Augie’s Coffee having to close.
The leading questions Redlands-area clients are asking this year are also a little different—What will the markets do in 2021? How can I plan for my business? How can I retire? And while the pandemic has negatively impacted some, others are doing well.
There are some bright sides, of course, with 63,000 jobs expected to be recovered for the area in 2021 with the vaccine and stimulus and the Inland Empire Economic Partnership also signaling optimism.
Regardless of where you stand financially, a new year brings promise, and is a great time to reassess your financial plan. Following are 10 financial strategies to consider:
1. Know your spending habits that have, likely, changed in the pandemic. Understand your current revenue or income after taxes, as well as expenses. Look for trends on where you’re most likely to spend and there are opportunities to save. Examine opportunities to address credit or debit card statements head-on and create a realistic plan.
2. Budget. Consider the 50-30-20 rule: 50% goes toward “must-haves” (groceries, rent, car insurance, other expenses you can’t or shouldn’t live without); 30% goes to discretionary (entertainment or shopping); the last 20% goes to savings and investments. This guideline can be adjusted based on your spending habits and discretionary income to reflect a strategy to which you’re most likely to adhere.
3. Invest in retirement – while it might seem like a lifetime away for some, saving for retirement can never start too early; the earlier you start, the longer these funds have to your employer sponsors a retirement plan, take advantage if you can.
4. Max out your HSA. Often underused, Health Savings Accounts can offer tax advantages for individuals with high deductible health plans to save for healthcare expenses. These funds can be rolled over from year to year, building up as you age, and are available when you may need to use them more. There is no time limit on usage of the funds.
5. Reduce debt. Alleviate the nagging worry of debt, and mounting interest, by making minimum required monthly payments, or more, if possible. Know the balance and interest rate for each loan you have and seek out ways to refinance to shorten repayment schedules.
6. Invest in long-term trends. Like automation, smart mobility, renewable energy, especially for younger investors with long investment time horizons. Consider thematic investing, linking long-term trends and related social and environmental challenges to investment ideas or tie investments to your personal values.
7. Give back. With a donation of time or money to organizations you are passionate about.
8. Have the “money talk” with your spouse or partner: Break the trend of not talking about money and instead share stories to validate your experiences and support your goals together.
9. Stay informed. Become more familiar with the markets and how/why they move to better understand your portfolio and investing strategy. Start small by reading the local business section and other resources.
10. Enjoy. If you are able; use a portion of your funds to appreciate its perks without regrets, and, even better, do so supporting local shops and restaurants.
When you take steps focused on planning for spending, saving, and investing, you can become more empowered. Here’s to a prosperous 2021 for the entire Redlands community.
Happy New Year!
Erin Green is a Redlands-based senior wealth strategy associate at UBS Wealth Management USA. She holds Series 7, 9, 10, and 66 licenses as well as insurance licenses for life, health, variable annuities and long term care and develops wealth management plans and strategies tailored to fit the address client's goals.
She can be reached at Erin.Green@ubs.com.